The Hindu Business Line : `LKB-Centurion merger will help all stakeholders'

Ever since the merger proposal with Federal Bank fell through a couple of months ago, another deal has been in the offing. Federal Bank sources said the deal fell through because of differences between the two banks on the sale price.

Apparently, Federal Bank was ready to pay around Rs 235 crore while LKB was asking for more than Rs 300 crore.

Federal Bank was looking at LKB for two reasons - to remove a competitor from the local scene in Kerala and to increase its reach outside Kerala.

It hoped to take over LKB's 50 odd branches outside Kerala. The deal, however, did not go through and Federal Bank would now have to contend with a stronger competitor on its home turf.

A senior banker familiar with these developments said, "The coming together of LKB with Centurion Bank of Punjab would certainly be in the interest of LKB.

"The customers, staff, stakeholders and society would be benefited. Uncertainty would not help anybody. If the employees (of Kerala-based banks) soften their stand and their opposition to such developments, it would help."

The banker also felt that Dhanalakshmi Bank would be the other target, since the promoters' stake is much higher than the RBI's prescribed limit.

He said, "Lopsided shareholding is not healthy in the interest of corporate governance. Catholic Syrian and TMB could learn from this and put their house in order."

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